They are available all over. Tools to help write a business plans can be found in books, software programs, and on-line sites. While many of them have some good features to them, for many entrepreneurs these aids become a short-cut.
It is rather easy to identify a plan that has been written with the help of the latest software tools or books. Several things to prove it:
- They have a predetermined structure, so all plans written using these tools are almost the same. A real professional can spot plans written with the help of popular software a mile away.
- They tend to have fairly weak transitions and flow from section to section.
- They have sections that make no sense for some businesses, but people leave them in and try to write something. For example, a section on distribution often makes very little sense for a service business, but it is in the software and it ends up in their plan any way.
- Most importantly, the financial statements are often contradictory with the written part of the plan. As a rule this is a fatal red flag for most financial sponsors, including bankers and investors.
Experienced business plan readers do not read the plan in the order it is presented. Typically, they read the plan in this order:
- Skim over the Executive Summary to see if it is even in the ball park for plans they consider.
- Look at the Team to see who is proposing to do the deal.
- The next is marketing plan. And as they read it they are looking back at your income statement to see if the marketing plan explains your revenue forecasts. This is the foundation of any business plan. It is desirable for marketing plan and revenue forecasts to tell the same story in two different languages: one in English and the other in the language of business.
- The next step is to look at the operating plan and compare it to the expense forecasts to see if it is consistent, realistic, and complete.
- If they are still interested, they will then look at the financing plan to see if they like the deal structure.
Remember that they may throw it in the trash at any point in this evaluation. For example, typical VC gets hundreds of plans annually. Only a small number get any significant consideration and only a small handful will get funded.
When you develop your plan, work on it in the order that they will evaluate it. Start with market research of the industry, competitive environment and potential customers. Try to use it with the purpose to develop a strong and convincing marketing plan. Then estimate your revenues based on the marketing plan. Take your time. This is probably the hardest step of writing a plan if you do it correctly. Revenues are simply price time’s quantity, but those are two of the most uncertain issues you will face.
Then work on the operating plan and expenses. Usually it is easier for most of us. But, don't worry about getting it right down to the last penny. Too often we waste time on these sections. We feel safer here, so seem to want to work on that which we feel most comfortable with.
Save the money you would have spent on one of those books or software packages and treat yourself to dinner when you finish writing the plan the correct way.
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